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Exhibit 2.7
STOCK PURCHASE AGREEMENT
AMONG
XXXXX HEALTH SERVICES, INC.,
THE COMPANY,
THE SHAREHOLDERS NAMED HEREIN,
THE SHAREHOLDERS,
INSTITUTIONAL PHARMACY SERVICES, INC.,
THE BUYER,
AND
CAPSTONE PHARMACY SERVICES, INC.,
THE PARENT
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TABLE OF CONTENTS
ARTICLE I. PURCHASE AND SALE.........................................................1
1.1 Purchase and Sale..................................................1
1.2 Assets at Closing..................................................2
1.3 Excluded Items.....................................................3
1.4 Continuing Contracts, Leases and Liabilities.......................3
1.5 Delivery of Stock..................................................4
ARTICLE II. RECEIVABLES..............................................................5
2.1 Collection of Receivables..........................................5
ARTICLE III. PURCHASE PRICE..........................................................5
3.1 Purchase Price.....................................................5
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS...................................................5
4.1 Organization, Qualification and Authority..........................6
4.2 Capitalization and Stock Ownership.................................6
4.3 Absence of Default.................................................7
4.4 Financial Statements...............................................7
4.5 Operations Since October, 31 1996 .................................8
4.6 Absence of Certain Liabilities.....................................9
4.7 Employment Discrimination..........................................9
4.8 Licenses and Permits..............................................10
4.9 Medicare, Medicaid and Other Third-Party Payors...................10
4.10 Compliance with Zoning, Land Use and Other Laws; Easements........11
4.11 Title to Assets...................................................11
4.12 Leases and Contracts..............................................12
4.13 Environmental Matters.............................................13
4.14 Miscellaneous Representations Relating to Real Estate.............15
4.15 Litigation........................................................15
4.16 Company Employees.................................................15
4.17 Labor Relations...................................................16
4.18 Insurance.........................................................16
4.19 Broker's or Finder's Fee..........................................17
4.20 Conflicts of Interest.............................................17
4.21 Intellectual Property.............................................17
4.22 Inventories.......................................................17
4.23 Motor Vehicles....................................................17
4.24 Employee Benefit Plans............................................17
4.25 Compliance with Healthcare and Other Laws.........................18
4.26 Condition of Assets...............................................19
4.27 WARN Act..........................................................19
4.28 Tax Returns; Taxes................................................19
4.29 Stock Value; Operating Targets....................................19
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4.30 Beds Under Contract...............................................20
4.31 No Omissions or Misstatements.....................................20
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER..................................20
5.1 Organization, Qualification and Authority.........................20
5.2 Absence of Default................................................21
5.3 Broker's or Finder's Fee..........................................21
ARTICLE VI. COVENANTS OF PARTIES....................................................21
6.1 Preservation of Business and Assets...............................21
6.2 Absence of Material Change........................................22
6.3 Access to Books and Records.......................................22
6.4 Medicare and Medicaid Reporting...................................23
6.5 Preserve Accuracy of Representations and Warranties...............23
6.6 Maintain Books and Accounting Practices...........................24
6.7 Indebtedness; Liens...............................................24
6.8 Compliance with Laws and Regulatory Consents......................24
6.9 Maintain Insurance Coverage.......................................24
6.10 No Sale, Merger or Consolidation..................................25
6.11 Guarantors and Sureties...........................................25
ARTICLE VII. CLOSING................................................................25
7.1 Closing...........................................................25
7.2 Shareholders' Representative......................................25
ARTICLE VIII. COMPANY'S AND SHAREHOLDERS'
CONDITIONS TO CLOSE........................................................26
8.1 Representations and Warranties True at Closing; Compliance
with Agreement....................................................26
8.2 No Action/Proceeding..............................................26
8.3 Order Prohibiting Transaction.....................................26
8.4 [Reserved]........................................................26
8.5 Employment Agreements.............................................26
ARTICLE IX. BUYER'S CONDITIONS TO CLOSE.............................................26
9.1 Representations and Warranties True at Closing; Compliance with
Agreement.........................................................27
9.2 Regulatory Approvals..............................................27
9.3 No Action/Proceeding..............................................27
9.4 Inspection of Assets; U.C.C. Searches, etc........................27
9.5 Order Prohibiting Transaction.....................................27
9.6 [Reserved.........................................................27
9.7 Non-Competition Agreements........................................27
9.8 Employment Agreements.............................................28
9.9 Stock Value; Operating Targets....................................28
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9.10 Beds Under Contract...............................................28
9.11 Third Party Consents; Releases....................................28
ARTICLE X. OBLIGATIONS OF COMPANY AND SHAREHOLDERS
AT CLOSING..............................................................28
10.1 Documents Relating to Title.......................................28
10.2 Possession........................................................29
10.3 Opinion of Counsel................................................29
10.4 Corporate Good Standing and Corporate Resolution..................29
10.5 [Reserved]........................................................29
10.6 Third Party Consents..............................................29
10.7 Releases..........................................................29
10.8 Additionally Requested Documents; Post-Closing Assistance.........29
10.9 Confidentiality, Non-Competition and Employment Agreements........30
10.10 Assumption Agreement..............................................30
ARTICLE XI. OBLIGATIONS OF BUYER AT CLOSING.........................................30
11.1 Purchase Price....................................................30
11.2 Corporate Good Standing and Certified Board Resolutions...........30
11.3 [Reserved]........................................................30
11.4 Opinion of Buyer's Counsel........................................30
11.5 Employment Agreements.............................................30
ARTICLE XII. OPINION OF BUYER'S COUNSEL.............................................30
ARTICLE XIII. SURVIVAL OF PROVISIONS AND INDEMNIFICATION............................31
13.1 Survival..........................................................31
13.2 Indemnification by Shareholders...................................31
13.3 Indemnification by Company, Buyer, and Parent.....................32
13.4 Rules Regarding Indemnification...................................32
ARTICLE XIV. PRESERVATION OF BUSINESS
AND NONCOMPETE RESTRICTIONS................................................34
14.1 Covenant Not to Compete...........................................34
14.2 Enforceability....................................................35
ARTICLE XV. ARBITRATION............................................................35
15.1 Arbitration.......................................................35
15.2 Third Party Claims................................................35
15.3 Venue.............................................................35
15.4 Power of Arbitrator...............................................35
15.5 Costs and Expenses................................................36
ARTICLE XVI. MISCELLANEOUS.........................................................36
16.1 Assignment........................................................36
16.2 Other Expenses....................................................36
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16.3 Notices...........................................................36
16.4 Confidentiality; Prohibition on Trading...........................37
16.5 Controlling Law...................................................37
16.6 Headings..........................................................37
16.7 Benefit...........................................................37
16.8 Partial Invalidity................................................37
16.9 Waiver............................................................38
16.10 Counterparts......................................................38
16.11 Interpretation; Knowledge.........................................38
16.12 Entire Agreement..................................................38
16.13 Further Assurance of Shareholders After Closing...................38
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
January 24, 1997, by and among XXXXX HEALTH SERVICES, INC., a California
corporation (the "Company"), the parties executing this Agreement as Optionees
(as defined below) and as shareholders (Optionees and shareholders are
collectively referred to herein as the "Shareholders"), and INSTITUTIONAL
PHARMACY SERVICES, INC., a Maryland corporation (the "Buyer") and wholly-owned
indirect subsidiary of CAPSTONE PHARMACY SERVICES, INC., a Delaware corporation
(the "Parent" or "Capstone").
R E C I T A L S:
WHEREAS, Shareholders own and operate the Company, a corporation that
operates an institutional pharmacy service business in Hayward, California and
the surrounding areas, all as more particularly described on Exhibit A hereto,
which Exhibit sets forth the type of services and products provided by the
Company at each location (collectively, the "Business"); and
WHEREAS, Shareholders own all of the issued and outstanding capital stock
of the Company (the "Stock") and Xxxxx Xxxxx, Xxxx X. Xxxxx, Xxxxxx Xxxxxxxxxx,
Xxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxxxxx,
Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxx ("Optionees") are holders under certain
compensatory stock options of the Company (the "Options"); and
WHEREAS, Shareholders desire to sell and transfer the Stock to Buyer, and
Buyer desires to purchase the same from Shareholders, subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound hereby, agree as follows:
ARTICLE I. PURCHASE AND SALE
1.1 Purchase and Sale. Shareholders agree to sell, transfer, assign, convey
and deliver to Buyer, and Buyer agrees to pay the Purchase Price (as provided
below) to Shareholders for, and to purchase from Shareholders, all right, title
and interest in and to the Stock, which consists of all of the capital stock of
the Company issued and outstanding immediately prior to Closing (as such term is
defined herein). Further, Optionees agree to convert all Options into the right
to receive cash, to be paid in accordance with paragraph 3.1 herein, at Closing.
Shareholders shall deliver to Buyer at Closing all stock certificates
representing the Stock, duly endorsed for transfer or accompanied by duly
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executed stock powers. The Stock shall be delivered free and clear of all
claims, liens, restrictions, suits, proceedings, calls, proxies, charges,
options, security interests and encumbrances of any kind.
1.2 Assets at Closing. At Closing the Company's assets, tangible and
intangible, real and personal (collectively, the "Assets"), shall be owned free
and clear of all encumbrances, mortgages, pledges, liens, security interests,
obligations and liabilities other than the Continuing Liabilities (as defined in
paragraph 1.4), which Assets shall include, without limitation, the following:
(1) All right, title and interest in and to all of the land and real
estate leased by the Company and used in connection with the Business as listed
in Exhibit 1.2(1) attached hereto and in and to all structures, improvements,
fixed assets and fixtures including fixed machinery and fixed equipment situated
thereon or forming a part thereof and all appurtenances, easements and
rights-of-way related thereto (collectively, the "Real Estate") subject,
however, to any rights of lessors in and to the Real Estate and subject to the
rights of any mortgagees of such lessors;
(2) All tangible personal property, medical and other equipment,
machinery, data processing hardware and software, furniture, furnishings,
appliances, vehicles and other tangible personal property of every description
and kind and all replacement parts therefor used in connection with the Business
including, without limitation, the items listed on Exhibit 1.2(2) attached
hereto (collectively, the "Equipment and Furnishings");
(3) All inventory of goods and supplies used or maintained in
connection with the Business including, without limitation, those reflected on
the Financial Statements, except as disposed of in the ordinary course of
business prior to Closing (collectively, the "Inventory");
(4) All accounts and notes receivables (the "Receivables");
(5) All cash, bank accounts (as listed by name and address of banking
institution, account name and account and routing numbers on Exhibit 1.2(5)
attached hereto), money market accounts, other accounts, certificates of deposit
and other investments of the Company (the "Cash and Cash Equivalents");
(6) All patient, medical, personnel, corporate and other records
related to the Business (including both hard and microfiche copies, if any), and
all manuals, books and records used in operating the Business, including,
without limitation, personnel policies and files and manuals, accounting
records, and computer software;
(7) To the full extent transferable, all licenses, permits,
registrations, certificates, consents, accreditations, approvals and franchises
necessary to operate and
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conduct the Business, together with assignments thereof, if required, and all
waivers whichthe Company currently has, if any, of any requirements pertaining
to such licenses, permits, registrations, certificates, consents,
accreditations, approvals and franchises;
(8) All goodwill, and, to the extent assignable by the Company, all
warranties (express or implied) and rights and claims related to the Assets or
the operation of the Business;
(9) All prepaid expenses including, without limitation, those reflected
on the Financial Statements, except as used in the ordinary course of business
prior to Closing;
(10) Contract and leasehold rights and interests pursuant to contracts
for purchase or lease of personal property, construction contracts, contracts
for purchase, sale or lease of equipment, goods or services currently furnished,
or to be furnished after Closing in connection with the Business and approved by
Buyer;
(11) All intangible or intellectual property owned, leased, licensed or
possessed by either the Company or the Shareholders and utilized in connection
with the Business, including without limitation, the names "Xxxxx Health
Services" and derivatives thereof, to the extent the Company or the Shareholders
has rights in or to each such name;
(12) All corporate, fiscal and other records pertaining to Company or
the Business; and
(13) All of Company's right, title and interest in any partnerships,
joint ventures or similar arrangements.
1.3 Excluded Items. Immediately prior to conveyance of the Stock, Company
shall transfer to the Shareholders all debts, liabilities and other obligations
of any nature whatsoever, whether known or unknown, contingent or otherwise,
other than the Continuing Liabilities as specifically set forth in paragraph
1.4(1). The parties acknowledge and agree that Buyer is not assuming and the
Company is not retaining any of the Excluded Items and that, following Closing,
Buyer and Company will not have any right, title, interest or obligation with
respect to the Excluded Items.
1.4 Continuing Contracts, Leases and Liabilities.
(1) At Closing, Company will retain and agree to pay or perform, as the
case may be, only (a) those obligations constituting working capital liabilities
incurred in the ordinary course of business, other than long-term and interest
bearing debt, which Company expressly elects to retain as specifically set forth
on Exhibit 1.4 attached hereto, (b) those obligations constituting working
capital liabilities incurred in the ordinary course of business on and after the
Effective Date (as such term is defined in paragraph 7.1),
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other than long-term and interest bearing debt, (c) those obligations arising on
and after the Effective Date under those Leases and Contracts (as defined in
paragraph 4.12) whichCompany expressly elects to retain, and (d) any long-term
or interest bearing debt or continuing capitalized obligations, including Three
Hundred Thirty-Four Thousand Eighty and No/100 Dollars ($334,080.00) in
subordinated debentures (the "Debentures"), which the Company expressly elects
to retain as specifically set forth on Exhibit 1.4 (collectively, the
"Continuing Liabilities").
(2) Buyer is not assuming any debt, liability or obligation of the
Company or of the Shareholders and, except for the Continuing Liabilities, it is
expressly agreed and understood by each of the parties to this Agreement that
after the Closing Company shall not retain or be liable for, any debt, liability
or obligation of Company prior to the Closing or of the Shareholders of any type
or description whatsoever, whether related or unrelated to the Stock, the
Business or the transactions contemplated under this Agreement and that the
Shareholders shall be liable and responsible for the payment or performance, as
the case may be, of all debts, liabilities, obligations, contracts, leases,
notes payable, accounts payable, commitments, agreements, suits, claims,
indemnities, mortgages, taxes, contingent liabilities and other obligations of
Company arising prior to Closing and of the Shareholders including, without
limitation, any and all investment tax credit recapture, depreciation recapture,
recapture or prior period adjustments under Medicare, Medicaid and Blue Cross,
all impositions of income tax and other taxes, including, without limitation,
payroll related taxes; all employee wages, salaries and benefits including,
without limitation, COBRA and WARN obligations, sick pay, and other accrued
employee benefits including rights of Company's retirees to participate in
medical plans. Notwithstanding any statement contained in this Agreement or
otherwise seemingly to the contrary, Company shall not be obligated to retain
(nor shall Buyer be directly liable for) liabilities pursuant to clauses (a) and
(d) of paragraph 1.4(1) in excess of the amount of liabilities included in the
calculation of Shareholder's equity pursuant to Section 4.29 (the "Continuing
Liabilities Cap").
(3) For purposes of calculating the amount of the Continuing
Liabilities, the present value of payments to be made on and after the Effective
Date with respect to any Continuing Liability that is a capitalized obligation
under generally accepted accounting principles shall be considered part of the
amount of such Continuing Liabilities.
1.5 Delivery of Stock. Shareholders shall deliver to Buyer at Closing all
stock certificates representing the Stock, duly endorsed for transfer or
accompanied by duly executed stock powers. The Stock will be conveyed to Buyer
fully paid and nonassessable with good and valid title, free and clear of all
liens, charges, claims, liabilities, encumbrances, security interests,
restrictive agreements, options, rights of others and imperfections of title of
any nature whatsoever, including all amounts due and payable for federal, state
and local transfer taxes.
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ARTICLE II. RECEIVABLES
2.1 Collection of Receivables. After Closing, Company will proceed to
collect the Receivables. Shareholders shall provide such assistance in the
collection process as Company or Buyer may reasonably request. If, within 180
days following Closing, Buyer and Company have collected less than the amount of
the Receivables reflected in the Interim Financial Statements (as such term is
defined in paragraph 4.4(1)) in excess of the reserves also therein set forth,
which reserves the Buyer has analyzed after due diligence and, relying on
information provided by Seller or its representatives, agrees is commercially
reasonable in amount (such event being a "Receivables Shortfall"), (a) the
Purchase Price shall be reduced by the amount of such shortfall pursuant to
Article XIII; and (b) uncollected Receivables shall be assigned to Shareholders
provided that such Receivables relate to facilities that are not ongoing clients
of the Business or to private (non facility) payors. Company shall, and Buyer
shall cause Company to, diligently collect the Receivables with at least as much
effort and attention as Company has heretofore collected receivables. Company
and Buyer shall for the six month period following Closing furnish the
Shareholders' Representative with a written monthly report scheduling in detail
progress on collection of the Receivables for such month. Responsible officers
of Company and Buyer shall, if requested, meet on at least a monthly basis with
Shareholders' Representative to review progress on collection of the
Receivables. Any of the Receivables owed to the Company by Integrated Health
Services, Inc. shall be excluded from the Receivables Shortfall.
ARTICLE III. PURCHASE PRICE
3.1 Purchase Price. The purchase price payable by Buyer to Shareholders for
the Stock and in consideration for the agreements contained herein, including
the agreements contained in Article XIV hereof, will be Three Million Six
Hundred Thousand Dollars ($3,600,000.00), payable in immediately available funds
to each Shareholder, or his or her respective authorized designee, by wire
transfer at Closing (the "Purchase Price"). The Purchase Price shall be
allocated among the Shareholders and Optionees as set forth in Exhibit 3.1
attached hereto.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS
As a material inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereunder, Shareholders, including
Optionees, hereby jointly and severally represent and warrant to Buyer, which
representations and warranties shall be true and correct on the date of Closing,
as follows:
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4.1 Organization, Qualification and Authority. Company is a corporation
duly organized, validly existing and in good standing in the State of California
and is not required and is not qualified to do business in any other
jurisdiction. Company has full corporate power and authority to own, lease and
operate its facilities and assets as presently owned, leased and operated, and
to carry on its business as it is now being conducted. Except for Shareholders
and Optionees, no other person or entity owns or holds, has any interest in,
whether legal, equitable or beneficial, or has the right to purchase, any
capital stock or other security of Company. Company owns no capital stock,
security, interest or other right, or any option or warrant convertible into the
same, of any corporation, partnership, joint venture or other business
enterprise. Company and Shareholders have the full right, power and authority to
execute, deliver and carry out the terms of this Agreement and all documents and
agreements necessary to give effect to the provisions of this Agreement, to
consummate the transactions contemplated on the part of each such party hereby,
and to take all actions necessary, in their respective capacities, to permit or
approve the actions of Company and Shareholders taken in connection with this
Agreement. The execution, delivery and consummation of this Agreement, and all
other agreements and documents executed in connection herewith by Company and
Shareholders, have been or will be on or before Closing duly authorized by all
necessary action on the part of such parties. This Agreement and all other
agreements and documents executed in connection herewith by Company and/or
Shareholders, upon due execution and delivery thereof, shall constitute the
valid and binding obligations of Company and/or Shareholders, as the case may
be, enforceable in accordance with their respective terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally and by general principles of equity.
4.2 Capitalization and Stock Ownership. Except for Shareholders and
Optionees, no other person or entity owns or holds, has any interest in, whether
legal, equitable or beneficial, or has the right to purchase, any capital stock
or other security of Company. The Stock, being 97,732 shares, no par value, of
common stock, and options for 8,085 additional shares of common stock,
constitutes all issued and outstanding securities of Company, is duly
authorized, validly issued, fully paid and nonassessable, and is owned free and
clear of any liens, charges, encumbrances, security interests, pledges or any
other restrictions whatsoever. At Closing, Company shall have no outstanding
subscriptions, options, warrants, calls, contracts, convertible securities or
other instruments, agreements or arrangements of any nature whatsoever under
which Company is or may be obligated or compelled to issue any capital stock,
security or interest of any kind, or to transfer or modify any right with
respect to any capital stock, security or other interest, and no one has any
preemptive rights, right of first refusal or similar rights with respect to the
Stock or any equity interest in Company. Neither Company nor Shareholders are a
party to any, and there exist no, voting trusts, stockholder agreements, pledge
agreements or other agreements relating to or restricting the transferability of
any shares of the Stock or equity interests of Company. The Stock
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has been issued in accordance with all applicable federal and state securities
laws or pursuant to exemptions therefrom.
4.3 Absence of Default. The execution, delivery and consummation of this
Agreement, and all other agreements and documents executed in connection
herewith by Company and Shareholders will not constitute a violation of, or be
in conflict with, will not, with or without the giving of notice or the passage
of time, or both, result in a breach of, constitute a default under, create (or
cause the acceleration of the maturity of) any debt, indenture, obligation or
liability affecting Company or its Business or rights in the Stock, result in
the creation or imposition of any security interest, lien, charge or other
encumbrance upon any of the Stock, or otherwise adversely affect Buyer, Company
or the Business under: (a) any term or provision of the Charter or Bylaws of
Company; (b) any contract, lease, purchase order, agreement, document,
instrument, indenture, mortgage, pledge, assignment, permit, license, approval
or other commitment to which Company and/or Shareholders are a party or by which
Company, Shareholders, Stock or the Assets are bound; (c) any judgment, decree,
order, regulation or rule of any court or regulatory authority; or (d) any law,
statute, rule, regulation, order, writ, injunction, judgment or decree of any
court or governmental authority or arbitration tribunal to which Company, any
Shareholders, Stock and/or the Assets are subject, except the obligation of
Buyer duly to procure at its expense the consent, where required, of various
relevant governmental bodies or other third parties, if any, to the continuation
in the right of the Company of the several licences and permits and other rights
of the Company referred to in paragraph 1.2(7) above.
4.4 Financial Statements.
(1) Attached hereto as Exhibit 4.4 are true and correct copies of
Company's reviewed balance sheets as of January 31, 1996, and its reviewed
income statements for the year then ending (the "Fiscal Year Financial
Statements"), and the interim unaudited balance sheet and income statement of
Company for the nine (9) month period ended October 31, 1996 (the "Interim
Financial Statements" which with the Fiscal Year Financial Statements shall be
the "Financial Statements"). The Financial Statements are based on the books and
records of Company and present fairly, in compliance with generally accepted and
consistently applied accounting principles, the financial position of Company as
of, and the results of its operations for, the periods specified subject to, in
the case of the Interim Financial Statements, normal recurring year-end
adjustments the effect of which will not be, individually or in the aggregate,
materially adverse.
(2) The books and records of Company are in such order and completeness
that an unqualified audit may be performed for any period prior to Closing not
already audited. Shareholders shall reasonably cooperate with Buyer in Buyer's
attempt to perform an audit of Company for any period after December 31,1991 and
prior to Closing not already audited.
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4.5 Operations Since October, 31 1996 . Since October 31, 1996, there has
been no:
(1) change in the condition, financial or otherwise, which has, or
could reasonably be expected to have, a materially adverse effect on any of the
Assets, the Business or future prospects of the Business, or in the results of
the operations of the Company taken as a whole;
(2) loss, damage or destruction of or to any of the Assets in any
material respect, whether or not covered by insurance;
(3) sale, lease, transfer or other disposition by Company of, or
mortgages or pledges of or the imposition of any lien, charge or encumbrance on,
any portion of the Assets, other than those made in the ordinary course of
business;
(4) with the exception of bonus payments as set forth in Exhibit
4.5(4) attached hereto, increase in the compensation payable by Company to
Shareholders, any of its employees, directors, independent contractors or
agents, or increase in, or institution of, any bonus, insurance, pension,
profit-sharing or other employee benefit plan or arrangements made to, for or
with the employees, directors, independent contractors or agents of Company;
(5) cumulative net operating loss incurred in the operation of the
Business;
(6) adjustment or write-off of Receivables or reduction in reserves for
Receivables outside of the ordinary course of business;
(7) change in the accounting methods or practices employed by Company
or change in adopted depreciation or amortization policies;
(8) issuance or sale by Company, or contract or other commitment
entered into by Company or Shareholders for the issuance or sale, of any shares
of capital stock or securities convertible into or exchangeable for capital
stock of Company;
(9) payment by Company of any dividend, distribution or extraordinary
or unusual disbursement or expenditure or intercompany payable;
(10) sale, transfer, pledge, mortgage or other disposition of any of
the Stock or the Assets (except inventory and equipment held for rent in the
ordinary course of business and consistent with Company's past practice);
merger, consolidation or similar transaction; or solicitation therefor;
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(11) security interest, guarantee or other encumbrance, or other than
in the ordinary course of business, obligation or liability, in each case
whether absolute, accrued, contingent or otherwise, or whether due or to become
due, incurred or paid by Company to any person or entity; or the making by
Company of any loan or advance to, or an investment in, any person or entity;
(12) federal, state or local statute, rule, regulation, order or case
adopted, promulgated or decided which, to the best knowledge of Company and
Shareholders, materially adversely affecting Company, Stock, Business or Assets;
(13) strike, work stoppage or other labor dispute materially adversely
affecting the Business; or
(14) termination, waiver or cancellation of any rights or claims of
Company, under contract or otherwise.
Further, prior to the Effective Date, with the exception of the bonus pay
set forth in Exhibit 4.5(4), neither the Shareholders nor any of their family
members or affiliates has received any compensation, benefits or distributions
from Company, whether as salary, bonus, fees, dividends or any other form of
compensation, other than amounts not greater than the amount of compensation and
benefits contemplated for each of Xxxxx Xxxxx and Xxxx Xxxxx (as applicable)
pursuant to the agreements referenced in paragraph 9.8 hereof.
4.6 Absence of Certain Liabilities. Except as set forth in the Interim
Financial Statements, Company has, and as of the Closing will have, no
contingent liabilities or obligations.
4.7 Employment Discrimination. Except as disclosed in Exhibit 4.7 attached
hereto, no person or party (including, without limitation, any governmental
agency) has asserted, or to the best knowledge of the Company or Shareholders,
has threatened to assert, any claim for any action or proceeding, against
Company (or any officer, director, employee, agent or Shareholders of Company)
arising out of any statute, ordinance or regulation relating to wages,
collective bargaining, discrimination in employment or employment practices or
occupational safety and health standards (including, without limitation, the
Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, as amended,
the Occupational Safety and Health Act, the Age Discrimination in Employment Act
of 1967, or the Americans With Disabilities Act). The claims disclosed in
Exhibit 4.7 will not result in any liability to or obligation of Buyer, directly
or through the Company, and will not cause or lead to any lien or encumbrance
being placed, created or filed against or upon any of the Stock or Assets, and
Shareholders will hold Buyer and Company harmless with respect to the same.
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4.8 Licenses and Permits.
(1) Company has all local, state and federal licenses, permits,
registrations, certificates, contracts, consents, accreditations and approvals
(collectively, the "Licenses and Permits") necessary for Company to occupy,
operate and conduct the Business, and there does not exist any waivers or
exemptions relating thereto. There is no default on the part of Company or any
other party under any of the Licenses and Permits. Shareholders are not aware of
any circumstances that would constitute grounds for revocation, suspension or
limitation of any of the Licenses or Permits. Copies of each of the Licenses and
Permits are attached to and listed on Exhibit 4.8(1) attached hereto. The most
recent licensure surveys, deficiency reports and plans of correction related to
each of these items has also been included in Exhibit 4.8(1). Company is, and at
the time of Closing will be, licensed by the regulatory bodies listed on Exhibit
4.8(1). No notices have been received by Company or Shareholders with respect to
any threatened, pending, or possible revocation, termination, suspension or
limitation of the Licenses and Permits.
(2) Company is not required to have any certificates of need or similar
authorizations in order to operate the Business.
(3) Each employee of Company has all Licenses and Permits required for
each such employee to perform such employee's designated functions and duties
for Company in connection with conducting the Business, and there exists no
waivers or exemptions relating thereto. There is no default under, nor are
Shareholders aware of any circumstances that would constitute grounds for
revocation, suspension or limitation of, any such Licenses and Permits.
4.9 Medicare, Medicaid and Other Third-Party Payors.
(1) Company participates in the Medicare and Medicaid Programs
(collectively, the "Programs"). A list of and copies of its existing Medicare
and Medicaid contracts and other documentation evidencing such participation
(collectively, the "Program Agreements") are included in Exhibit 4.12 attached
hereto. Company is, and will be at the time of Closing, in compliance in all
material respects with all of the terms, conditions and provisions of the
Program Agreements.
(2) No notice of any offsets against future reimbursements under or
pursuant to the Programs has been received by either Company or Shareholders,
nor is there any basis therefor. There are no pending appeals, adjustments,
challenges, audits, litigation, notices of intent to recoup past or present
reimbursements with respect to the Programs. Company has not been subject to or
threatened with loss of waiver of liability for utilization review denials with
respect to the Programs during the past twelve (12) months, nor has either
Company or Shareholders received notice of any pending, threatened or possible
decertification or other loss of participation in, any of the Programs.
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(3) Company currently has contractual arrangements with Blue Cross and
other third-party Payors. A list of and copies of its existing Blue Cross
contract(s) and other third-party payor contract(s) are included in Exhibit 4.12
attached hereto. Company is, and will be at the time of Closing, in full
compliance with all of the material terms, conditions and provisions of such
contracts.
(4) All liabilities and contractual adjustments of Company under any
third-party payor or reimbursement programs have been properly reflected and
adequately reserved for in the Financial Statements. In the event that,
following Closing, Buyer or Company suffers any offsets against any
reimbursement under any third-party payor or reimbursement programs due to Buyer
or Company relating to the periods on or prior to the Closing that are in excess
of amounts reserved, then Shareholders shall immediately pay to Buyer the
amounts so offset (to the extent it is in excess of amounts reserved), with
interest at a rate equal to eight percent (8%) per annum.
4.10 Compliance with Zoning, Land Use and Other Laws; Easements. To the
knowledge of Shareholders, none of the Real Estate is in violation of any
zoning, public health, building code or other similar laws applicable thereto or
to the occupancy and/or operation thereof, nor do there exist any waivers or
exemptions relating to the Real Estate with respect to any non-conforming use or
other zoning or building code matters. The Company has such lease arrangements
as are necessary to continue operation of the Business, copies of which are set
forth in Exhibit 4.12 attached hereto.
4.11 Title to Assets.
(1) Company is the sole legal and beneficial owner of the personal
property included in the Assets, free and clear of all mortgages, security
interests, liens, leases, covenants, assessments, easements, options, rights of
refusal, restrictions, reservations, defects in the title, encroachments, and
other encumbrances, except as set forth in the Leases and Contracts and except
such as are not material in amount, arise in and are customarily discharged in
the ordinary course of business and do not interfere with the continued
possession and use of such personal property. The Assets are all the assets set
forth on the Interim Financial Statements or used in the operation of the
Business.
(2) The descriptions of the Real Estate contained in Exhibit 1.2 (1)
are accurate and sufficient for their intended purposes, and such descriptions
include all real property leased by Company and used in connection with the
Business or set forth on the Interim Financial Statements. Company owns no real
property. Company is in lawful possession of all of the Real Estate that is
leased rather than owned, including, without limitation, the buildings,
structures and improvements situated thereon and appurtenances thereto, in each
case free and clear of all mortgages, liens and other encumbrances or
restrictions that are related to or impair the Assets or the Business.
Additionally, the transfer and conveyance of the Stock to Buyer as contemplated
by the terms of this
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Agreement once effected as contemplated hereunder, will vest in the Buyer,
either directly or indirectly through Company, the lawful right to possess and
use the leased Real Estate, superior in right to all others subject, however, to
any rights of lessors in and to the Real Estate and subject to the rights of any
mortgagees of such lessors.
4.12 Leases and Contracts.
(1) Exhibit 4.12 attached hereto sets forth a complete and accurate
list of all contracts, including the Program Agreements, agreements, purchase
orders, leases, subleases, options and commitments, oral or written, and all
assignments, amendments, schedules, exhibits and appendices thereof, affecting
or relating to the Business, Stock or any Asset or any interest therein, to
which Company and/or Shareholders are a party or by which Company, the Assets or
the Business is bound or affected, including, without limitation, service
contracts, management agreements, equipment leases and building leases
pertaining to any part of the Real Estate (collectively, the "Leases and
Contracts"). Attached to Exhibit 4.12 are accurate and complete copies of all
written Leases and Contracts and written summaries of key terms of all oral
Leases and Contracts. Except for the Continuing Liabilities, all obligations
under the Leases and Contracts shall be assumed by the Shareholders.
(2) None of the Leases and Contracts has been modified, amended,
assigned or transferred and each is in full force and effect and is valid,
binding and enforceable in accordance with its respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and by general principles of equity.
(3) No event or condition has happened or presently exists which
constitutes a default or breach or, after notice or lapse of time or both, would
constitute a default or breach by any party under any of the Leases and
Contracts. There are no counterclaims or offsets under any of the Leases and
Contracts.
(4) There does not exist any security interest, lien, encumbrance or
claim of others created or suffered to exist on any interest created under any
of the Leases and Contracts (except for those that result from or relate to
leased Assets).
(5) No purchase commitment by Company is in excess of Company's
ordinary business requirements.
(6) Conveyance to Buyer of the Stock will not default, alter or
terminate any of the Leases and Contracts, and Buyer, directly or through
Company, will be entitled to all rights thereunder.
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4.13 Environmental Matters.
(1) Hazardous Substances. As used in this Paragraph, the term
"Hazardous Substances" means any hazardous or toxic substances, materials or
wastes, including but not limited to those substances, materials, and wastes
defined in Paragraph 101 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), listed in the
United States Department of Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances pursuant to 40 CFR Part
302, or which are regulated under any other Environmental Law (as such term is
defined herein), and any of the following: hydrocarbons, petroleum and petroleum
products, asbestos, polychlorinated biphenyls, formaldehyde, radioactive
substances (other than naturally occurring materials in place), flammables and
explosives.
(2) Compliance with Laws and Regulations. All operations or activities
upon, or any use or occupancy of the Real Estate, or any portion thereof, by
Company, any Affiliates of Company (wherein the term "Affiliates" shall mean any
person or entity controlling, controlled by or under common control at any time
with Company, and the term "control" shall mean the power, directly or
indirectly to direct the management or policies of such person or entity), and
any agent, contractor or employee of any agent or contractor of Company or its
Affiliates ("Agents"), or any tenant or subtenant of Company of any part of the
Real Estate is and has been in compliance with any and all laws, regulations,
orders, codes, judicial decisions, decrees, licenses, permits and other
applicable requirements of governmental authorities with respect to Hazardous
Substances, pollution or protection of human health and safety (collectively,
"Environmental Laws"), including but not limited to the release, emission,
discharge, storage and removal of Hazardous Substances. The Company, Affiliates
and Agents have kept the Real Estate free of any lien imposed pursuant to
Environmental Laws. To the best knowledge of Company and Shareholders, all prior
owners, operators and occupants of the Real Estate complied with Environmental
Law. Except for uses and storage or presence of Hazardous Substances reasonably
necessary or incidental to the customary operation of a business similar to the
Business, as appropriate which, if required, was duly licensed or authorized by
appropriate governmental authorities or otherwise permitted by Environmental
Law, and which complies with Environmental Law:
(a) Neither Company nor its Affiliates or Agents have allowed the
use, generation, treatment, handling, manufacture, voluntary transmission or
storage of any Hazardous Substances over, in or upon the Real Estate, nor, to
the best knowledge of Company or Shareholders, has the Real Estate ever been
used for any of the foregoing.
(b) Neither Company nor its Affiliates or Agents have installed or
permitted to be installed, in or on the Real Estate friable asbestos or any
substance containing asbestos in condition or amount deemed hazardous by
Environmental Law.
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(c) Company has not at any time engaged in or permitted any
dumping, discharge, disposal, spillage, or leakage (whether legal or illegal,
accidental or intentional) of such Hazardous Substances, at, on, in or about the
Real Estate, or any portion thereof that would subject the Real Estate or Buyer
to clean-up obligations imposed by governmental authorities.
(d) None of the Real Estate, nor any part thereof, nor Company, nor
any present operator of the Real Estate (i) has either received or been issued a
notice, demand, request for information, citations, summons or complaint
regarding an alleged failure to comply with Environmental Law, or (ii) is
subject to any existing, pending, or, to the best knowledge of Company or
Shareholders, threatened investigation or inquiry by any governmental authority
for noncompliance with, or any remedial obligations under Environmental Law, and
there are no circumstances known to Company or Shareholders which could serve as
a basis therefor. The Company has not assumed any liability of a third party for
clean-up under or noncompliance with Environmental Law.
(e) To the best knowledge of Company and Shareholders, neither the
Company nor its Affiliates or Agents have transported or arranged for the
transportation of any Hazardous Substances to any location which is listed or,
to the best knowledge of Company and Shareholders, proposed for listing under
Environmental Law or is the subject of any enforcement action, investigation or
other inquiry under Environmental Law.
(3) Other Environmental Matters. To the best knowledge of Company and
Shareholders, there are no underground storage tanks on any portion of the Real
Estate, and the Real Estate is free of dangerous levels of naturally-emitted
radon. To the best knowledge of Company and Shareholders, no portion of the Real
Estate has ever been used as a landfill. Company has furnished to Buyer a copy
of any environmental audit, study, report or other analysis on the Real Estate,
which Company or its Affiliates obtained or was furnished.
(4) Company and Shareholders shall promptly notify Buyer in writing of
any order, receipt of any notice of violation or noncompliance with any
Environmental Law, any threatened or pending action by any claims made by any
third party of which either is aware relating to Hazardous Substances on,
emanations on or from, releases on or from, any of the Real Estate which relate
to the period prior to Closing; and shall promptly furnish Buyer with copies of
any written correspondence, notices or legal pleadings and written summaries of
any oral communications or notices in connection therewith. If, and only if,
required by law or the failure to do so would impose liabilities on Buyer or the
Assets, Buyer shall have the right, but shall not be obligated, to notify any
governmental authority of any state of facts which may come to its attention
with respect to Hazardous Substances on, released from or emanating from any
part of the Real Estate. Buyer shall give Company prior or simultaneous notice
of such notification.
4.14 Miscellaneous Representations Relating to Real Estate.
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(1) No part of the Real Estate is currently subject to condemnation
proceedings, and, to the best knowledge of Company and Shareholders, no
condemnation or taking is threatened or contemplated. There are no public
improvements which may result in special assessments against or otherwise affect
the Real Estate. There are no facts known to either Company or Shareholders that
would adversely affect the possession, use or occupancy of the Real Estate.
(2) Attached as Exhibit 4.14 are complete copies of all appraisals,
mechanical and structural studies or reports or assessments, engineering plans,
architectural drawings, soil studies, surveys and other documents which have
been prepared by or at the direction of Company or Shareholders within the last
five (5) years relating to any of the Assets.
(3) To the best knowledge of Company and Shareholders, all utilities
serving the Real Estate are adequate to operate the Real Estate in the manner it
is currently operated.
(4) To the best knowledge of Shareholders and Optionees, all potable
and industrial water and all gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage lines and systems and other similar
systems serving the Real Estate and the facilities of the Business are installed
and operating and are sufficient to enable the Real Estate and the facilities of
the Business to continue to be used and operated in the manner currently being
used and operated, and any so-called hook-up fees or other associated charges
accrued to date have been fully paid. Company has received no written
recommendation from any insurer to repair or replace any of the Assets with
which Company has not complied.
4.15 Litigation. Neither Company nor Shareholders have received notice of
any violation of any law, rule, regulation, ordinance or order of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality (including, without limitation, legislation
and regulations applicable to the Medicare and Medicaid programs, Food and Drug
Administration, Drug Enforcement Administration, state controlled substance
agencies and boards of pharmacy, environmental protection, civil rights, public
health and safety and occupational health). Except as set forth in Exhibit 4.15
attached hereto (for which Buyer assumes no liability), there are no lawsuits,
proceedings, actions, arbitrations, governmental investigations, claims,
inquiries or proceedings pending or, to the best knowledge of Seller and
Shareholders, threatened involving Seller, Shareholders, any of the Assets or
the Business.
4.16 Company Employees. Exhibit 4.16 attached hereto sets forth: (a) a
complete list of all of the Company's employees, and rates of pay, (b) true and
correct copies of any and all fringe benefits and personnel policies, (c) the
employment dates and job titles of each such person, and (d) categorization of
each such person as a full-time or part-time
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employee of Company. For purposes of this paragraph, "part-time employee" means
an employee who is employed for an average of fewer than twenty hours per week
or who has been employed for fewer than six (6) of the twelve (12) months
preceding the date on which notice is required pursuant to the "Worker
Adjustment and Retraining Notification Act" ("WARN"), 29 U.S.C. ss.2102 et seq.
Except as provided in Exhibit 4.12, Company has no employment agreements with
its employees. Exhibit 4.16 lists all ex-employees of Company utilizing or
eligible to utilize COBRA (health insurance). Shareholders agree to indemnify
and hold Buyer and Company harmless from and against any and all claims of
employees, whenever made, relating to their employment by Company through
Closing, except to the extent such claims are based on acts or omissions of
Buyer after Closing. Company has adequately accrued all salaries and wages,
related payroll taxes, vacation benefits, retirement and other fringe benefits
that have accrued to Company employees through the Closing Date, including
related payroll taxes.
4.17 Labor Relations. Company is not a party to any labor contract,
collective bargaining agreement, contract, letter of understanding, or any other
arrangement, formal or informal, with any labor union or organization which
obligates Company to compensate Company's employees at prevailing rates or union
scale, nor are any of its employees represented by any labor union or
organization. There is no pending or, to the best knowledge of Company and
Shareholders, threatened labor dispute, work stoppage, unfair labor practice
complaint, strike, administrative or court proceeding or order between Company
and any present or former employee(s) of Company. There is no pending or, to the
best knowledge of Company and Shareholders, threatened suit, action,
investigation or claim between Company and any present or former employee(s) of
Company, except as disclosed in Exhibit 4.15. There has not been any labor union
organizing activity at any location of Company, or elsewhere, with respect to
Company's employees within the last three years of which Company and
Shareholders are aware.
4.18 Insurance. Company has in effect and has continuously maintained
insurance coverage for all of its operations, personnel and assets, and for the
Assets and the Business. A complete and accurate list of all such insurance
policies is included in Exhibit 4.12. Exhibit 4.18 attached hereto sets forth a
summary of Company's current insurance coverage (listing type, carrier and
limits), and includes a list of any pending insurance claims relating to
Company. Shareholders agree to indemnify and hold Buyer and Company harmless
from and against such pending insurance claims to the extent such claims are not
satisfied by Company's insurance policies; provided, however, that Shareholders
have had reasonable advance notice of the settlement of such claims. Company is
not in default or breach with respect to any provision contained in any such
insurance policies, nor has Company failed to give any notice or to present any
claim thereunder in due and timely fashion.
4.19 Broker's or Finder's Fee. Except as to Whitestone Associates, Inc., to
which the Shareholders shall be solely responsible for payment of any and all
fees and expenses payable on or after Closing relating to the sale of the Stock
and the transactions
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contemplated herein, neither Company nor Shareholders have employed, or are
liable for the payment of any fee to, any finder, broker, consultant or similar
person in connection with the transactions contemplated under this Agreement.
4.20 Conflicts of Interest. Except for accounting services provided by
Independent Quality Care, Inc., none of the following is either a supplier of
goods or services to Company, or directly or indirectly controls or is a
director, officer, employee or agent of any corporation, firm, association,
partnership or other business entity that is a supplier of goods or services to
Company: (a) any Shareholders, (b) any director or officer of Company, or (c)
any entity under common control with Company or controlled by or related to any
Shareholders.
4.21 Intellectual Property. The Company neither owns nor uses any
intellectual property except such rights as it may have in its corporate name
and it has not licensed the use of such name to any party.
4.22 Inventories. The Inventory is and on Closing will be of a quality and
quantity previously used by Company in the ordinary course of business
determined and valued consistent with Company's past practice and will contain
no significant amount of excess, dated, or obsolete inventory. The Inventory is
properly valued at the lower of cost or market value on a first-in/first-out
basis in accordance with generally accepted accounting principles consistently
applied and is accounted for on the basis of semi-annual physical inventories
and estimated cost of goods factors revised semi-annually. Since the date of the
Interim Financial Statements, Company has not decreased or substituted its items
of Inventory other than in the ordinary course of business.
4.23 Motor Vehicles. All motor vehicles used in the Business, whether owned
or leased, are listed in Exhibit 1.2(2) attached hereto. All such vehicles are
properly licensed and registered in accordance with applicable law.
4.24 Employee Benefit Plans.
(1) Welfare Benefit Plans. Exhibit 4.24(1) attached hereto contains a
true, accurate and complete list of each "employee welfare benefit plan" (as
defined in Paragraph 3(1) of the Employee Retirement Income Security Act of 1974
as amended ("ERISA")) maintained by Company or to which Company contributes or
is required to contribute (such employee welfare benefit plans being hereinafter
collectively referred to as the "Welfare Benefit Plans"). Copies of all Welfare
Benefit Plans have previously been provided to Buyer.
(2) Pension Benefit Plans. Exhibit 4.24(2) attached hereto contains a
true and complete list of each "employee pension benefit plan" (as defined in
Paragraph 3(2) of ERISA) maintained by Company, to which Company contributes or
is required to contribute, or which covered employees of Company during the
period of their employment
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with any predecessor of Company, including any multi-employer pension plan as
defined under Internal Revenue Code of 1986, Paragraph 414(f) (such employee
pension benefit plans being hereinafter collectively referred to as the "Pension
Benefit Plans"). Copies of all Pension Benefit Plans have previously been
provided to Buyer.
(3) Liabilities. There are no unfunded liabilities under any Welfare
Benefit Plan or Pension Benefit Plan. Neither Buyer nor Company shall be liable
or responsible for any debt, obligation, responsibility or liability under any
such plans. Shareholders hereby assume liability under such plans for all claims
due and unpaid at Closing and for all claims incurred before Closing, whether or
not paid or presented before Closing.
(4) Termination of Participation. Upon Closing, Company shall cease to
be a participating employer under all Pension Benefit Plans and Welfare Benefit
Plans maintained by Company, and any such action by Company shall in no way
diminish Shareholders' obligations to Buyer; provided, however, that Buyer and
Company, jointly and severally, shall indemnify and hold harmless Shareholders
of and from any liability and expense whatsoever due to any claim, proceeding,
investigation or audit arising directly or indirectly out of any plan
termination after Closing.
4.25 Compliance with Healthcare and Other Laws. Company has not made any
kickback, bribe or payment to any person or entity, directly or indirectly, for
referring, recommending or arranging business or patients with, to or for
Company which action could have a material adverse effect on the Business. The
parties to this Agreement hereby waive compliance with any bulk sales, or
similar statute, applicable to the transactions contemplated under this
Agreement; provided however that Shareholders shall be liable for any claims
against the Company, Buyer, or Parent under any such statute related to this
Agreement or the transactions contemplated herein. The transactions contemplated
under this Agreement comply with any applicable state antitrust or similar laws.
None of the Leases and Contracts and no activity of Company violates Section
1877 of the Social Security Act or any similar provision of applicable state law
in any material respect. None of the Leases and Contracts and no activity of
Company violates provisions of applicable state law relating to the corporate
practice of medicine in any material respect. The Company is in compliance
(without obtaining waivers, variances or extensions) with, all federal, state
and local laws, rules and regulations which relate to the operations of the
Business, except where the failure to be in compliance could not have a material
adverse effect on the Business. All healthcare, tax and other returns, reports,
plans and filings of any nature required to be filed by Company with any
federal, state or local governmental authorities and any third-party payors have
been properly completed, except where the failure to be so completed or filed
could not have a material adverse effect on the Business, and timely filed in
compliance with all applicable requirements or extensions thereof. Each return,
report, plan and filling contains no materially untrue or misleading statements
and does not omit anything which would cause it to be misleading or inaccurate
in any material respect. Company shall retain and be responsible, for any
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liability incurred, and Company shall be entitled to receive any refund or other
benefit which may result from the same in connection with any such return,
report, plan and filing.
4.26 Condition of Assets. To the best knowledge of Shareholders and
Optionees, the Equipment and Furnishings are all of the "Equipment" reflected on
the Interim Financial Statements, other than those items sold and replaced in
the ordinary course of business. The Assets comprise all of the following: all
assets owned by the Company and all assets used in connection with the Business
and any related businesses. The Equipment and Furnishings are structurally
sound, in good operating condition and repair and are adequate for the uses to
which they are being put. None of the Equipment and Furnishings is in need of
maintenance or repair except for ordinary and routine maintenance and repair not
material in nature or cost. The Company has received no written recommendation
from any insurer to repair or replace any of the Assets with which the Company
has not complied. Since October 31,1996, the Business has been operated in
conformity with the methods and procedures observed and utilized during the two
year period immediately preceding October 31, 1996, and, since October 31, 1996
and except as required in the ordinary and usual course of the Business, no
assets have been removed, distributed, assigned or paid by or from Company or
Shareholders.
4.27 WARN Act. Since ninety (90) days prior to Effective Date, Company has
not temporarily or permanently closed or shut down any single site of employment
or any facility or any operating unit, department or service within a single
site of employment, as such terms are used in WARN.
4.28 Tax Returns; Taxes. Company has filed all federal, state and local tax
returns and tax reports required by such authorities to be filed as of the time
of Closing. Company has paid all taxes, assessments, governmental charges,
penalties, interest and fines due or claimed to be due as of the time of Closing
(including, without limitation, taxes on properties, income, franchises,
licenses, sales and payrolls) by any federal, state or local authority.
Additionally, the reserves for taxes reflected in the Financial Statements are
adequate to cover all tax liabilities accrued as of the respective dates
thereof. There is no pending tax examination or audit of, nor any action, suit,
investigation or claim asserted or, to the best knowledge of Company and
Shareholders, threatened against Company or Shareholders by any federal, state
or local authority; and Company and/or Shareholders have not been granted any
extension of the limitation period applicable to any tax claims.
4.29 Stock Value; Operating Targets. As of the date of Closing and after
giving credit to the Company for Twenty Nine Thousand and No/100 Dollars
($29,000.00) of option exercise price as if paid by Optionees, Shareholders'
equity shall be no less than Nine Hundred Forty-Six Thousand Dollars
($946,000.00). For the nine (9) month period ended at October 31, 1996: (a) the
Company's earnings before interest, taxes and depreciation and the add back of
non-operating expenses shall have been no less than Two Hundred Sixty-One
Thousand Dollars ($261,000.00); (b) the Company's net revenues
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shall have been no less than Six Million Three Hundred Seventy-Five Thousand
Dollars ($6,375,000.00), including not more than One Million Six Hundred
Thousand Dollars ($1,600,000.00) in revenue from beds under contract with
Integrated Health Services, Inc. or any of its affiliates ("IHS"); and (c) the
Company incurred no less than Four Hundred Thousand ($400,000.00) in
non-operating or redundant expenses.
4.30 Beds Under Contract. As of the date of Closing, the Company shall
serve, pursuant to binding written contracts, a minimum of Three Thousand Five
Hundred (3,500) beds, including beds under contract with IHS not in excess of
Seven Hundred and Twenty-Five (725).
4.31 No Omissions or Misstatements. There is no fact material to the Stock,
Assets, liabilities, Business or prospects of Company which has not been set
forth or described in this Agreement or in the Exhibits hereto and which is
material to the conduct, prospects, operations or financial condition of
Company, Business or the Assets taken as a whole. None of the information
included in this Agreement and Exhibits hereto, or other documents furnished or
to be furnished by Shareholders or Company, or any of its representatives,
contains any untrue statement of a material fact or is misleading in any
material respect or omits to state any material fact necessary in order to make
any of the statements herein or therein not misleading in light of the
circumstances in which they were made. Copies of all documents referred to in
any Exhibit hereto have been delivered or made available to Buyer and constitute
true, correct and complete copies thereof and include all amendments, exhibits,
schedules, appendices, supplements or modifications thereto or waivers
thereunder.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Shareholders and Company to enter into this Agreement
and to consummate the transactions contemplated herein, Buyer and Parent hereby
represent and warrant to Shareholders and Company, which representations and
warranties shall be true and correct on the date of Closing, as follows:
5.1 Organization, Qualification and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has the full corporate power and authority to own, lease and
operate its properties and assets as presently owned, leased and operated and to
carry on its business as it is now being conducted. Buyer has the full right,
power and authority to execute, deliver and carry out the terms of this
Agreement and all documents and agreements necessary to give effect to the
provisions of this Agreement and to consummate the transactions contemplated on
the part of Buyer hereby. The execution, delivery and consummation of this
Agreement and all other agreements and documents executed in connection herewith
by Buyer has been duly authorized by all necessary corporate action on the part
of Buyer. No other action on the part of Buyer or any other person or entity is
necessary to authorize
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the execution, delivery and consummation of this Agreement and all other
agreements and documents executed in connection herewith. This Agreement, and
all other agreements and documents executed in connection herewith by Buyer,
upon due execution and delivery thereof, shall constitute the valid binding
obligations of Buyer, enforceable in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally and by general principles
of equity.
5.2 Absence of Default. The execution, delivery and consummation of this
Agreement and all other agreements and documents executed in connection herewith
by Buyer will not constitute a violation of, be in conflict with, or, with or
without the giving of notice or the passage of time, or both, result in a breach
of, constitute a default under, or create (or cause the acceleration of the
maturity of) any debt, indenture, obligation or liability or result in the
creation or imposition of any security interest, lien, charge or other
encumbrance upon any of the Assets (except in the ordinary course pursuant to
Buyer's existing credit agreement) under: (a) any term or provision of the
Certificate of Incorporation or Bylaws of Buyer; (b) any contract, lease,
agreement, indenture, mortgage, pledge, assignment, permit, license, approval or
other commitment to which Buyer is a party or by which Buyer is bound; (c) any
judgment, decree, order, regulation or rule of any court or regulatory
authority, or (d) any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court or governmental authority or arbitration
tribunal to which Buyer is subject.
5.3 Broker's or Finder's Fee. Except as to Adirondack Capital Advisors,
LLC, to which Buyer shall be solely responsible for payment of any and all fees
and expenses, Buyer has not employed and is not liable for the payment of any
fee to any finder, broker, government official, consultant or similar person in
connection with the transactions contemplated by this Agreement.
5.4 Investment Intent. Buyer is acquiring the Stock for its own account and
not with a view to its distribution within the meaning of Section 2(11) of the
Securities Act of 1933, as amended.
ARTICLE VI. COVENANTS OF PARTIES
6.1 Preservation of Business and Assets. From the Effective Date until the
Closing, Company and Shareholders shall use their best efforts and shall do or
cause to be done all such acts and things as may be necessary to preserve,
protect and maintain intact the operation of the Business and Assets as a going
concern consistent with prior practice and not other than in the ordinary course
of business, to preserve, protect and maintain for Buyer the goodwill of the
suppliers, employees, clientele, patients and others having business relations
with Company or the Business. Company shall use its best efforts to retain its
employees in their current positions up to Closing. Buyer, Company and
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Shareholders shall use their best efforts to facilitate the consummation of the
transactions contemplated under this Agreement. Until termination of this
Agreement, Company and Shareholders will not sell or transfer, or negotiate the
sale or transfer of, either the Assets or Stock of Company. Except as set forth
on Exhibit 6.1(a) and except as to amounts paid to Independent Quality Care for
accounting services in the ordinary course of business (which is listed on
Exhibit 6.1(b)), from the Effective Date until the Closing, Company shall pay no
dividend, and shall make no distribution or extraordinary payment to
Shareholders or any third party or pay any intercompany payable and, other than
in the ordinary course of business, Company will not sell, discard or dispose of
any of the Assets. None of the Leases and Contracts shall be amended in any
material respect between the date hereof and Closing without the prior written
consent of Buyer. From the Effective Date until Closing, Company and any party
in possession of all or any part of the Real Estate will not perform any
material grading or excavation, construction or removal of any improvement, or
make any material other change or improvement upon or about the Real Estate.
From the Effective Date until Closing, Company and any party in possession of
all or any part of the Assets will maintain and keep the Assets in a sanitary,
well-maintained condition and in good order and repair.
6.2 Absence of Material Change. From the Effective Date until the Closing,
neither Company nor Shareholders shall make any change in the Business or and in
the utilization of the Assets and shall not enter jointly or separately into any
other material contract or commitment or any other transaction with respect to
the Business or the Assets without the prior written consent of Buyer.
6.3 Access to Books and Records.
(1) From the date hereof until the Closing, Company and Shareholders
shall give to Buyer and to Buyer's counsel, accountants and other
representatives, full access to all of Company's offices, properties, books,
contracts, commitments, records and affairs relating to the Stock, Assets or the
Business so that Buyer may inspect and audit them and shall furnish to Buyer a
copy of all documents and information concerning the properties and affairs of
Company, the Business, Stock or the Assets as Buyer may request. If any such
books, records and materials are in the custody of third parties, Company and
Shareholders shall direct such third parties to promptly provide them to Buyer.
Copies of documents furnished to Buyer by Company and Shareholders will be
returned by Buyer upon request if the transaction is not consummated. Company
and Shareholders shall provide Buyer promptly with interim financial statements
of Company and any other management reports, as and when they are available.
(2) Following the Closing, Shareholders shall permit Buyer and its
representatives (including, without limitation, its counsel and auditors), to
have access to, and examine and make copies of, any books and records relating
to the Business, Stock or Assets which Shareholders are required by law to
retain, if any, and which relate to transactions or events occurring prior to
the Closing. For a period of five years after the
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Closing, Shareholders agree that, prior to the destruction or disposition of any
such books or records, Shareholders shall provide not less than forty-five (45)
days', nor more than ninety (90) days', prior written notice to Buyer of such
proposed destruction or disposal. If Buyer desires to obtain any such documents
or records, it may do so by notifying Shareholders in writing at any time prior
to the date scheduled for such destruction or disposal. In such event,
Shareholders shall not destroy such documents or records and the parties shall
then promptly arrange for the delivery of such documents or records to Buyer,
its successors or assigns. All out-of-pocket costs associated with the delivery
of the requested documents or records shall be paid by Buyer.
(3) After Closing, Shareholders shall make the books and records of
Company retained by Shareholders, if any, available to Buyer (and, without
limitation, to Buyer's auditors and other agents) and shall otherwise cooperate
with Buyer in order to permit Buyer to conduct an audit of Company's financial
statements for any period prior to Closing not already audited. Shareholders
agree to cooperate with Buyer in Buyer's preparation of financial statements
relating to such periods and Buyer's filing in a timely manner of registration
statements, private placement memoranda and periodic reports, if any, pursuant
to any applicable federal or state securities law.
6.4 Medicare and Medicaid Reporting. Until the Closing, Company shall have
timely filed or caused to be filed all reports and claims of every kind, nature
or description, required by law or by written or oral contract to be filed with
respect to the purchase of services by third-party payors, including, but not
limited to, Medicare, Medicaid and Blue Cross. Company has paid or will pay all
liabilities for contracted adjustments, discounts, refunds and other offsets in
connection with the filing of such reports and claims through the date of
Closing.
6.5 Preserve Accuracy of Representations and Warranties. Shareholders and
Company shall refrain from taking any action which would render any
representation and warranty contained in Article IV hereof untrue, inaccurate or
misleading as of Closing. Each of the Shareholders and Company will promptly
notify Buyer of any lawsuit, claim, audit, investigation, administrative action
or other proceeding asserted or commenced against Company or its directors,
officers, or Shareholders, that may involve or relate in any way to Company, the
Assets, Stock, Shareholders or the operation of the Business. Each of the
Shareholders and Company shall promptly notify Buyer of any facts or
circumstances that come to its attention and that cause, or through the passage
of time may cause, any of Shareholders' or Company's representations, warranties
or covenants to be untrue or misleading at any time from the date hereof to
Closing.
6.6 Maintain Books and Accounting Practices. From the date hereof until the
Closing, Company shall maintain its books of account in the usual, regular and
ordinary manner on a basis consistent with prior years and shall make no change
in its accounting methods or practices.
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6.7 Indebtedness; Liens. Other than in the ordinary course of business as
reflected in the Financial Statements, from the Effective Date until the
Closing, with respect to the Stock and Assets, including the Business and
operations conducted with the Assets, Company shall not create, incur, assume,
guarantee or otherwise become liable or obligated with respect to any
indebtedness for borrowed money, nor make any loan or advance to, or any
investment in, any person or entity, nor create any lien, security interest,
mortgage, right or other encumbrance in any of the Assets, without Buyer's prior
written approval. At Closing, the Assets will be free and clear of all
mortgages, security interests, liens, leases, covenants, assessments, easements,
options, rights of first refusal, restrictions, reservations, defects in title,
encroachments or other encumbrances, except as set forth in those Leases and
Contracts which are to be retained by Company, except such as are not material
in amount, arise in and are customarily discharged in the ordinary course of
business and do not interfere with the continued possession and use of the
Assets, and Company shall deliver to Buyer such releases, U.C.C. termination
statements and other documents as Buyer may, prior to Closing, specify and
reasonably request to evidence the same.
6.8 Compliance with Laws and Regulatory Consents. From the date hereof
until the Closing, (a) Company shall comply with all applicable statutes, laws,
ordinances and regulations, (b) Company shall keep, hold and maintain all
certificates, certificates of need, certificates of exemption, accreditations,
participation, licenses, and other permits necessary for the business and
operation of the Assets, (c) Shareholders and Company shall use their reasonable
efforts to cooperate fully with Buyer and to assist Buyer, at Buyer's expense,
to obtain all consents, approvals, exemptions and authorizations of third
parties, whether governmental or private, necessary to consummate the
transactions contemplated by this Agreement, and (d) Shareholders and Company
shall make and cause to be made all filings and give and cause to be given all
notices which may be necessary or desirable on their part under all applicable
laws and under their respective contracts, agreements and commitments in order
to consummate the transactions contemplated by this Agreement.
6.9 Maintain Insurance Coverage. From the date hereof until the Closing,
Company shall maintain and cause to be maintained in full force and effect the
existing insurance on the Assets and the operations of the Business and shall
provide at Closing written evidence satisfactory to Buyer that such insurance
continues to be in effect, that all premiums due have been paid, and that Buyer
has been named additional insured since the Effective Date.
6.10 No Sale, Merger or Consolidation. From the date hereof until the
Closing, Shareholders shall not sell, pledge or transfer any of the Stock, and
Company shall not sell all or substantially all of the Assets, or merge or
consolidate with any other entity; neither shall solicit any inquiries,
proposals or offers relating to any such transactions; and each such party shall
promptly notify the Buyer orally, and confirm in writing, of all relevant
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details relating to inquiries, proposals or offers which either may receive
relating to any of the matters referred to in this paragraph.
6.11 Guarantors and Sureties. Company and Buyer shall replace such of the
Shareholders, if any, who are guarantors or sureties with respect to any
obligation of the Company which is a Continuing Liability and, until such
replacement, shall jointly and severally indemnify and hold harmless such
guarantors and sureties from all liability, cost or expense arising out of such
status.
ARTICLE VII. CLOSING
7.1 Closing. If all of the conditions to Closing set forth in Articles VIII
and IX hereof are satisfied, then the Closing shall occur on or by January
31,1997 at the offices of Xxxxxx, Xxxxxxx & Xxxxx, San Francisco, California, or
at such other time or place as the parties may mutually agree (the "Closing").
Upon consummation, the Closing shall be deemed to be effective and the transfer
of the Assets shall be deemed to have occurred, as of 12:01 a.m. local time on
January 1, 1997 (the "Effective Date"). In the event that Closing has not
occurred by January 31, 1997, then any party not in default hereunder may
terminate this Agreement without further obligation.
7.2 Shareholders' Representative. Each of the Shareholders and Optionees
hereby appoints Xxxxxx X. Xxxxx and A.J. Caffereta, III (the "Shareholder
Representatives"), or either of them severally, with full power of substitution,
as their attorneys in fact to represent them at the Closing, to execute and
deliver on their behalf the Assignment and Assumption Agreement and such other
instruments as may be necessary or proper to complete the sale contemplated by
this Agreement, to collect the proceeds of sale payable hereunder, to pay all
legal fees, brokerage commissions and other expenses of sale, to establish
reasonable reserves of not more than Fifty Thousand and No/100 Dollars
($50,000.00) for not more than One Hundred Eighty (180) days from Closing, to
disburse the net proceeds of sale hereunder to the various Shareholders and
Optionees and to negotiate and settle with the Company and Buyer all
post-Closing claims, disputes and controversies of any nature. Shareholders and
Optionees hereby agree to hold harmless Buyer and Parent for their reliance upon
this Section 7.2 and for any action or omission on the part of the Shareholder
Representatives.
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ARTICLE VIII. COMPANY'S AND SHAREHOLDERS' CONDITIONS TO CLOSE
The obligations of Company and Shareholders under this Agreement are
subject to the satisfaction on or prior to Closing, of the following conditions
(which may be waived in writing by Company or Shareholders, in whole or in
part):
8.1 Representations and Warranties True at Closing; Compliance with
Agreement. The representations and warranties of Buyer and Parent contained in
this Agreement and in any certificate or document delivered pursuant hereto
shall be deemed to have been made again at the Closing and shall then be true in
all respects. Buyer and Parent shall have performed and complied with all
covenants, agreements and conditions required by this Agreement to be complied
with or performed by them prior to or at Closing.
8.2 No Action/Proceeding. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the transaction herein contemplated, and no governmental
agency or body or other entity shall have taken any other action or made any
request of Company, Shareholders or Buyer as a result of which Company or
Shareholders reasonably and in good xxxxx xxxx that to proceed with the
transactions hereunder may constitute a violation of law.
8.3 Order Prohibiting Transaction. No order shall have been entered in any
action or proceeding before any court or governmental agency, and no preliminary
or permanent injunction by any court shall have been issued which would have the
effect of (a) making the transactions contemplated by this Agreement illegal, or
(b) otherwise preventing consummation of such transactions. There shall have
been no United States federal or state statute, rule or regulations enacted or
promulgated after the date of this Agreement that would reasonably, directly or
indirectly, result in any of the consequences referred to in this paragraph.
8.4 [Reserved].
8.5 Employment Agreements. Buyer and each of Xxxxx Xxxxx and Xxxx Xxxxx
shall execute and deliver to Seller an Employment Agreement in the form attached
hereto as Exhibit 8.5.
ARTICLE IX. BUYER'S CONDITIONS TO CLOSE
The obligations of Buyer and Parent under this Agreement are subject to the
satisfaction, on or prior to Closing, of the following conditions (which may be
waived in writing by Buyer, in whole or in part):
9.1 Representations and Warranties True at Closing; Compliance with
Agreement. The representations and warranties of Shareholders and Company
contained
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in this Agreement (including the Exhibits hereto) and in any certificate or
document delivered pursuant hereto shall be deemed to have been made again at
the Closing and shall then be true in all material respects. Company and
Shareholders shall have performed and complied with all covenants, agreements
and conditions required by this Agreement to be performed or complied with by
them prior to or at Closing in all material respects.
9.2 Regulatory Approvals. Buyer shall have obtained (a) certification for
participation in the Medicaid Programs of the states where the Business is
conducted, (b) certification from the appropriate agency of the federal
government for participation in the federal Medicare Program, and (c) all other
consents, licenses, permits, approvals, provider contracts or determinations
necessary in the judgment of Buyer to acquire the Stock and operate the Assets
and Business as contemplated hereunder.
9.3 No Action/Proceeding. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the transaction herein contemplated, and no governmental
agency or body or other entity shall have taken any other action or made any
request of Company, Shareholders or Buyer as a result of which Buyer reasonably
and in good xxxxx xxxxx that to proceed with the transactions hereunder may
constitute a violation of law.
9.4 Inspection of Assets; U.C.C. Searches, etc. Buyer and its
representatives shall have had and continue to have reasonable rights of
inspection of the Business in connection with Buyer's due diligence review, and
the results of Buyer's inspection and due diligence review shall be acceptable
to it.
9.5 Order Prohibiting Transaction. No order shall have been entered in any
action or proceeding before any court or governmental agency, and no preliminary
or permanent injunction by any court shall have been issued which would have the
effect of (a) making the transactions contemplated by this Agreement illegal,
(b) otherwise preventing consummation of such transactions, or (c) imposing
material limitations on the ability of Buyer effectively to acquire and hold the
Stock or Assets, to operate the Business, or, in any case, to exercise rights of
ownership pursuant thereto. There shall have been no federal or state statute,
rule or regulations enacted or promulgated after the date of this Agreement that
would reasonably result, directly or indirectly, in any of the consequences
referred to in this paragraph.
9.6 [Reserved.]
9.7 Non-Competition Agreement. Xxx Xxxxx shall execute and deliver to Buyer
a Non-Competition Agreement in the form attached hereto as Exhibit 8.5.
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9.8 Employment Agreements. Buyer and each of Xxxxx Xxxxx and Xxxx Xxxxx
shall have entered into an employment agreement in the form attached hereto as
Exhibit 8.6.
9.9 Stock Value; Operating Targets. As of the date of Closing and after
giving credit to the Company for Twenty Nine Thousand and No/100 Dollars
($29,000.00) of option exercise price as if paid by Optionees, Shareholders'
equity shall be no less than Nine Hundred Forty-Six Thousand Dollars
($946,000.00). For the nine (9) month period ended at October 31, 1996: (a) the
Company's earnings before interest, taxes and depreciation and the add back of
non-operating expenses shall have been no less than Two Hundred Sixty-One
Thousand Dollars ($261,000.00); (b) the Company's net revenues shall have been
no less than Six Million Three Hundred Seventy-Five Thousand Dollars
($6,375,000.00) including revenue not in excess of One Million Six Hundred
Thousand Dollars ($1,600,000.00) from beds under contract with Integrated Health
Services, Inc. or any of its affiliates ("IHS"); and (c) the Company incurred no
less than Four Hundred Thousand ($400,000.00) in non-operating or redundant
expenses.
9.10 Beds Under Contract. As of the date of Closing, the Company shall
serve, pursuant to binding written contracts, a minimum of Three Thousand Five
Hundred (3,500) beds, including beds under contract with IHS not in excess of
Seven Hundred and Twenty-Five (725).
9.11 Third Party Consents; Releases. Shareholders and Company shall provide
to the Buyer all third party consents, releases and authorizations believed by
Buyer to be necessary or advisable for the legal and proper consummation of all
agreements and transactions contemplated within this Agreement, each in form and
substance acceptable to Buyer other than consents referred to in Section 6.8
above.
ARTICLE X. OBLIGATIONS OF COMPANY AND SHAREHOLDERS AT CLOSING
At Closing, Company and Shareholders shall deliver or cause to be delivered
to Buyer the following in form and substance reasonably satisfactory to Buyer:
10.1 Documents Relating to Title. Shareholders shall execute, acknowledge,
deliver and cause to be executed, acknowledged and delivered to Buyer:
(1) Stock certificates, registered in the name of the Shareholders,
duly endorsed by Shareholders or with stock powers attached, representing all of
the Stock.
(2) The resignation of each member of the Board of Directors and each
officer of Company effective as of the Closing.
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10.2 Possession. Company shall deliver to Buyer full possession and control
of the Stock, Business and Assets.
10.3 Opinion of Counsel. Shareholders shall deliver to Buyer the favorable
opinion of counsel for Shareholders and Company, dated as of Closing, in the
form attached hereto as Exhibit 10.3.
10.4 Corporate Good Standing and Corporate Resolution. Shareholders shall
deliver to Buyer certificates of good standing from the Secretary of State of
Company's state of organization, and from each jurisdiction in which Company is
qualified to do business, certified copies of the Bylaws and charter of Company,
and a certified copy of the resolutions of the Board of Directors and
Shareholders of Company authorizing the execution, delivery and consummation of
this Agreement and the execution, delivery and consummation of all other
agreements and documents executed in connection herewith by them, including all
assumption agreements and other instruments required hereunder, sufficient in
form and content to meet the requirements of the law of the State of Company's
incorporation relevant to such transactions and certified by officers of Company
to be validly adopted and in full force and effect and unamended as of Closing.
10.5 [Reserved].
10.6 Third Party Consents. Shareholders shall deliver to Buyer all
consents, estoppels, approvals, releases, filings and authorizations of third
parties that Buyer believes are necessary or advisable for the legal and proper
sale and delivery of the Stock.
10.7 Releases. Shareholders shall deliver to Buyer executed releases of all
mortgages, security interests, liens, pledges, restrictions or other
encumbrances on or applicable to the Stock or Assets.
10.8 Additionally Requested Documents; Post-Closing Assistance. At the
reasonable request of Buyer at Closing and at any time or from time to time
thereafter, Shareholders shall cooperate with Buyer to put Buyer in actual
possession and operating control of the Stock, Company, Business and Assets,
execute and deliver such further instruments of sale, conveyance, transfer and
assignment, as Buyer may reasonably request in order to effectively sell,
convey, transfer and assign the same to Buyer, to execute and deliver such
further instruments and to take such other actions as Buyer may reasonably
request to release Buyer and Company from all obligation and liability with
regard to any obligation or liability retained or assumed by Shareholders, and
to execute and deliver such further instruments and to cooperate with Buyer as
Buyer may reasonably request or to enable Buyer and Company to obtain all
necessary health care or regulatory certifications, approvals, consents and
licenses, accreditation or permits.
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10.9 Confidentiality, Non-Competition and Employment Agreements.
Shareholders shall deliver to Buyer executed copies of each of the agreements
described in paragraphs 9.6, 9.7 and 9.8.
10.10 Assumption Agreement. Shareholders shall deliver to Buyer and the
Company an Assumption Agreement evidencing that Shareholders shall be
responsible for all obligations pertaining to past operations of the Business
other than the Continuing Liabilities.
ARTICLE XI. OBLIGATIONS OF BUYER AT CLOSING
At Closing, Buyer and Parent shall deliver or cause to be delivered to
Shareholders the following in a form and substance reasonably satisfactory to
Shareholders:
11.1 Purchase Price. Buyer shall pay to Shareholders the Purchase Price
upon the terms specified in this Agreement.
11.2 Corporate Good Standing and Certified Board Resolutions. Buyer shall
deliver to Shareholders a certificate of good standing from the Secretary of
State of Delaware, dated the most recent practical date prior to Closing,
together with a certified copy of the resolutions of the Board of Directors of
Buyer authorizing the execution, delivery and consummation of this Agreement and
all other documents executed in connection herewith.
11.3 [Reserved].
11.4 Opinion of Buyer's Counsel. Buyer shall deliver to Shareholders a
favorable opinion of counsel for Buyer, dated as of Closing, in the form
specified in Article XII hereof.
11.5 Employment Agreements. Buyer and each of Xxxxx Xxxxx and Xxxx Xxxxx
shall have entered into an Employment Agreement, as described in Section 8.6.
ARTICLE XII. OPINION OF BUYER'S COUNSEL
At the Closing, Buyer shall deliver to Shareholders an opinion of Xxxxxxx
Xxxxxx Xxxx Xxxxxxx & Manner, P.C. dated the date of the Closing and pursuant to
the Legal Opinion Accord of the ABA Section of Business Law (1991), in form and
substance reasonably satisfactory to Shareholders and their counsel to the
effect that:
(1) Buyer and Parent are corporations duly organized, validly existing
and in good standing under the laws of the State of Delaware and have all
requisite corporate
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power and corporate authority to own, operate and lease their properties and
assets and to carry on their businesses as now conducted.
(2) Buyer and Parent have the corporate power and corporate authority
to execute, deliver and carry out the terms of this Agreement and all documents
and agreements delivered by Buyer and Parent at Closing and to consummate the
transactions contemplated on the part of Buyer and Parent hereby and thereby;
Buyer and Parent have taken all action required by law, and their Certificate of
Incorporation and Bylaws, to authorize such execution, delivery and consummation
of this Agreement, and all other agreements delivered by Buyer and Parent at
Closing constitute the valid and binding obligations of Buyer and Parent
enforceable in accordance with their respective terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and by general principles of equity.
ARTICLE XIII. SURVIVAL OF PROVISIONS AND INDEMNIFICATION
13.1 Survival. The covenants, obligations, representations and warranties
of Buyer, Parent, Company and Shareholders contained in this Agreement, or in
any certificate or document delivered pursuant to this Agreement, shall be
deemed to be material and to have been relied upon by the parties hereto
notwithstanding any investigation prior to the Closing, shall not be merged into
any documents delivered in connection with the Closing, and shall survive the
date of Closing for a period of two (2) years; provided, however, that the
aforementioned two-year limitation will not apply to the representations,
warranties and covenants set forth in paragraphs 4.6 (as it relates to tax,
environmental or healthcare matters), 4.8, 4.9, 4.13, 4.25, 4.28 and 6.4 hereof
(collectively, the "Unrestricted Items"), each of which will survive the date of
Closing for the applicable statute of limitations but, except for criminal
matters, in no event for a period of not more than five (5) years.
13.2 Indemnification by Shareholders. Subject to the provisions of
paragraph 13.4, Shareholders, including Optionees, shall jointly and severally
promptly indemnify, defend, and hold harmless Buyer, Parent, Company and the
directors, officers, stockholders, employees and agents of each against any and
all losses, costs, and expenses (including reasonable cost of investigation,
court costs and legal fees actually incurred) and other damages resulting from
(i) any breach by either Company or Shareholders of any of the covenants,
obligations, representations or warranties or breach or untruth of any
representation, warranty, fact or conclusion contained in this Agreement or any
certificate or document of Company and/or Shareholders delivered pursuant to
this Agreement, (ii) any liability of Company not expressly retained by Company
pursuant to Paragraph 1.4 hereof, and (iii) any claim (whether or not disclosed
herein) that is brought or asserted by any third party(s) against Buyer, Parent,
or Company arising out of the ownership, licensing, operation or conduct of the
Business or Assets or the conduct of any of
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Company's employees, agents or independent contractors, relating to all periods
of time prior to Effective Date, subject to the limitations of Section 13.1
above.
13.3 Indemnification by Company, Buyer, and Parent. Subject to the
provisions of paragraph 13.4, Company, Buyer, and Parent shall promptly jointly
and severally indemnify, defend, and hold Shareholders harmless against any and
all losses, costs, and expenses (including reasonable cost of investigation,
court costs and legal fees) and other damages resulting from (i) any breach by
Buyer or Parent of any of their covenants, obligations, representations or
warranties or breach or untruth of any representation, warranty, fact or
conclusion contained in this Agreement or any certificate or document of Buyer
or Parent delivered pursuant to this Agreement, (ii) any claim which is brought
or asserted by any third party(s) against Shareholders for failure to pay or
perform any of the Continuing Liabilities, and (iii) subject to the other
provisions of this Agreement, any claim that is brought or asserted by any third
party(s) against Shareholders arising out of the ownership, licensing, operation
or conduct of the Business or the conduct of any of Company's employees, agents
or independent contractors, relating to periods of time subsequent to Effective
Date.
13.4 Rules Regarding Indemnification. The obligations and liabilities of
each party which may be subject to indemnification liability hereunder (the
"indemnifying party") to the other party (the "indemnified party") shall be
subject to the following terms and conditions:
(1) Claims by Non-parties. The indemnified party shall give written
notice within a reasonably prompt period of time to the indemnifying party of
any written claim by a third party which is likely to give rise to a claim by
the indemnified party against the indemnifying party based on the indemnity
agreements contained in this Article, stating the nature of said claim and the
amount thereof, to the extent known. The indemnified party shall give notice to
the indemnifying party that pursuant to the indemnity, the indemnified party is
asserting against the indemnifying party a claim with respect to a potential
loss from the third party claim, and such notice shall constitute the assertion
of a claim for indemnity by the indemnified party. If, within thirty (30) days
after receiving such notice, the indemnifying party advises the indemnified
party that it will provide indemnification and assume the defense at its
expense, then so long as such defense is being conducted, the indemnified party
shall not settle or admit liability with respect to the claim and shall afford
to the indemnifying party and defending counsel reasonable assistance in
defending against the claim. If the indemnifying party assumes the defense,
counsel shall be selected by such party and if the indemnified party then
retains its own counsel, it shall do so at its own expense. In no circumstances
shall an indemnifying party be liable for the fees and expenses of more than one
firm of lawyers, notwithstanding multiple indemnified parties and conflicts of
interest. If the indemnified party does not receive a written objection to the
notice from the indemnifying party within thirty (30) days after the
indemnifying party's receipt of such notice, the claim for indemnity shall be
conclusively presumed to have been assented to and approved, and in such case
the indemnified party may control the defense of the matter or case and, at its
sole discretion, settle or admit liability. If within the
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aforesaid thirty (30) day period the indemnified party shall have received
written objection to a claim (which written objection shall briefly describe the
basis of the objection to the claim or the amount thereof, all in good faith),
then for a period of ten (10) days after receipt of such objection the parties
shall attempt to settle the dispute as between the indemnified and indemnifying
parties.
(2) Claims by a Party. The determination of a claim asserted by a
party hereunder (other than as set forth in subparagraph (1) above) pursuant to
this Article shall be made as follows: The indemnified party shall give written
notice within a reasonably prompt period of time to the indemnifying party of
any claim by the indemnified party which has not been made pursuant to
subparagraph (1) above, stating the nature and basis of such claim and the
amount thereof, to the extent known. The claim shall be deemed to have resulted
in a determination in favor of the indemnified party and to have resulted in a
liability of the indemnifying party in an amount equal to the amount of such
claim estimated pursuant to this paragraph if within forty-five (45) days after
the indemnifying party's receipt of the claim the indemnified party shall not
have received written objection to the claim. In such event, the claim shall be
conclusively presumed to have been assented to and approved. If within the
aforesaid forty-five (45) day period the indemnified party shall have received
written objection to a claim (which written objection shall briefly describe the
basis of the objection to the claim or the amount thereof, all in good faith),
then for a period of sixty (60) days after receipt of such objection the parties
shall attempt to settle the disputed claim as between the indemnified and
indemnifying parties.
(3) Claims by a Straddle Patient. Any claim by a patient relating to
professional negligence or similar matters involving a patient served both prior
to the Effective Date and subsequent to the Effective Date will be the
responsibility of either Buyer or Shareholders in accordance with the following
guidelines: (i) if it is a claim in which the incident giving rise to liability
clearly arose prior to the Effective Date, Shareholders shall jointly and
severally respond to the loss and defense expenses; (ii) subject to the other
provisions of this Agreement, if it is a claim in which the incident giving rise
to liability clearly arose on or after the Effective Date, Buyer shall respond
to the loss and defense expenses; and (iii) in the event that the incident
giving rise to liability as to time is not clear, Shareholders and Buyer will
jointly defend the case and each will fully cooperate with the other in such
defense. Once the case is closed, Buyer and Shareholders shall agree to the
allocation of both indemnity and expenses.
(4) Limitation on Claims. The obligations of each of the Shareholders
under this Agreement shall not exceed the amounts received by such Shareholder
as Purchase Price and, if applicable, as consideration for those certain
Non-Competition Agreements referenced in paragraph 8.5 and 9.7 hereof. As to a
claim by the Buyer or Company against Shareholders, all claims by the Buyer and
Company against Shareholders will be first satisfied by offsetting the principal
amount and any interest due thereunder of those of the Debentures which are held
by Shareholders, the signatures of the Shareholders on this Agreement serving as
evidence of the consent to such offsets,
33
39
provided however that the Shareholders shall in no event be liable for any loss,
cost or expense arising from the occurrence or allocable to a time period prior
to the Closing, which loss, cost or expense would be barred by an applicable
statute of limitations but for a waiver by the Company after the Closing of such
statute of limitations. The restrictions of this section shall not, however,
restrict or limit in any manner the claims the Company may have against a
Shareholder outside this agreement, including, but not limited to, claims for
payment for services and goods provided by the Company to the Shareholder or the
Shareholder's business.
(5) Contribution among Shareholders. The several Shareholders,
including Optionees, agree to contribute or reimburse one another, as the case
may be, pro-rata according to their respective shareholdings (or in the case of
the Optionees their respective percentages of the gross proceeds paid by the
Buyer under Section 3.1 above) immediately prior to Closing, all amounts for
which any one or more of them may be liable hereunder in excess of his or their
pro-rata share, for any claim asserted hereunder by the Company, Buyer or,
directly or indirectly, any third party, against them or any one or more of
them, except for any such claim directly or entirely attributable to a
particular Shareholder arising out of an act or omission of such Shareholder
after Closing or arising out of the failure of a Shareholder or any business
enterprise controlled by the Shareholder to pay any receivable owing to the
Company. All disputes concerning the obligations of the several Shareholders to
contribute or reimburse hereunder shall be determined in arbitration in San
Francisco, California but as otherwise provided herein.
ARTICLE XIV. PRESERVATION OF BUSINESS
AND NONCOMPETE RESTRICTIONS
14.1 Covenant Not to Compete. Shareholders hereby covenant and agree with
Buyer that, during the NON-COMPETE PERIOD (as such term is defined herein),
within the NON-COMPETE AREA (as such term is defined herein), and with respect
to the NON-COMPETE BUSINESS (as such term is defined herein), no Shareholders
shall directly or indirectly, (a) acquire, lease, manage, consult for, serve as
agent or subcontractor for, finance, invest in, own any part of or exercise
management control over any Non-Compete Business as of the Closing, or (b)
solicit for employment or employ any person who at Closing or thereafter became
an employee of Buyer, Company or an affiliate unless such person is not so
employed for at least six (6) months, or (c) with respect to any customer,
patient, physician, physician group, or healthcare provider with whom Buyer,
Company and/or an Affiliate contracts with in connection with the Non-Compete
Business, either solicit the same in a manner which could adversely affect
Buyer, Company or an Affiliate, or make statements to the same which disparage
Buyer, Company, an Affiliate or their respective operations in any way. The
"Non-Compete Period" shall commence at the Closing and terminate on the second
anniversary thereof. The "Non-Compete Area" shall mean the counties of Northern
California in which, for the one calendar year period prior to Closing, Company
has had repeat Non-Compete Business. The term "Non-Compete
34
40
Business" shall mean institutional sales of pharmaceutical products by the
Company. Ownership of less than five percent (5%) of the stock of a publicly
held company shall not be deemed a breach of this covenant.
14.2 Enforceability. Notwithstanding the provisions herein for the
determination of disputes in arbitration, in the event of a breach of paragraph
14.1, Shareholders recognize that monetary damages shall be inadequate to
compensate Buyer and Company, and Buyer and Company shall be entitled, without
the posting of a bond or similar security and notwithstanding the arbitration
provisions contained in Article XIII, to an injunction restraining such breach,
with the costs (including attorney's fees) of securing such injunction to be
borne by the breaching Shareholder(s). Nothing contained herein shall be
construed as prohibiting Buyer or Company from pursuing any other remedy
available to either for such breach or threatened breach. All parties hereby
acknowledge the necessity of protection against the competition of Shareholders
and that the nature and scope of such protection has been carefully considered
by the parties. The period provided and the area covered are expressly
represented and agreed to be fair, reasonable and necessary. The consideration
provided for herein is deemed to be sufficient and adequate to compensate
Shareholders for agreeing to the restrictions contained in paragraph 14.1. If,
however, any court determines that the forgoing restrictions are not reasonable,
such restrictions shall be modified, rewritten or interpreted to include as much
of their nature and scope as will render them enforceable. In addition,
Shareholders receiving less than $50,000 for selling their shares to the Company
cshall not be barred by provisions of this Article XIV from working for a
competing business in a non-managerial position.
ARTICLE XV. ARBITRATION
15.1 Arbitration. Any and all disputes hereunder or concerning the judicial
interpretation hereof or with respect to the transactions contemplated herein,
shall be finally determined in binding Arbitration before a single arbitrator
under the then rules of the American Arbitration Association and any award in
such arbitration may be entered in and enforced by any court having
jurisdiction. It is the intention of the parties to arbitrate and the Federal
Arbitration Act shall pre-empt any local law with respect to the obligation to
arbitrate.
15.2 Third Party Claims. Notwithstanding the terms of the foregoing
paragraph 15.1, where any disputed matter concerns the liability of a party
hereto to indemnify or to be indemnified on account of a claim initiated by a
third party not a party to this Agreement and pending in any court, then such
matter shall be determined judicially.
15.3 Venue. Any Arbitration hereunder shall be conducted in San Francisco,
California, if initiated by Company or Buyer against the Shareholders or any of
them; and, in Dallas, Texas, if initiated by the Shareholders or any of them
against Company or Buyer.
35
41
15.4 Power of Arbitrator. The Arbitrator shall have no power or authority
to award consequential, statutory or punitive damages, or to assess interest on
any award.
15.5 Costs and Expenses. In the event any party hereto incurs reasonable
legal expenses to enforce or interpret any provision of this Agreement, the
prevailing party will be entitled to recover such legal expenses, including,
without limitation, attorney's fees, costs and disbursements, in addition to any
other relief to which such party shall be entitled.
ARTICLE XVI. MISCELLANEOUS
16.1 Assignment. Following Closing, Buyer and Company may freely assign any
or all of their respective rights or delegate any or all of their respective
obligations under this Agreement without the express written consent of
Shareholders. Shareholders may not assign any rights or delegate any obligations
under this Agreement without the prior written consent of Buyer, and any
prohibited assignment or delegation will be null and void.
16.2 Other Expenses. Except as otherwise provided in this Agreement,
Shareholders shall pay all of their and Company's expenses in connection with
the negotiation, execution, and implementation of the transactions contemplated
under this Agreement and Buyer shall pay all of its expenses in connection with
the negotiation, execution, and implementation of the transactions contemplated
under this Agreement. All sales and use taxes, recording fees and transfer taxes
incurred in connection under the transactions contemplated within this Agreement
shall be prorated as of the Effective Date between the Shareholders and Buyer
respectively, such that the Shareholders pay all such taxes with respect to the
Business up to the Effective Date, and the Buyer pays all such amounts
thereafter. Shareholders represent that, with respect to the laws of the State
of California, ad valorem or similar taxes are not applicable to the
transactions contemplated hereunder, and that Shareholders shall indemnify
Company and Buyer for any costs incurred from circumstances to the contrary.
16.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given: (a) if delivered
personally or sent by facsimile, on the date received, (b) if delivered by
overnight courier, on the day after mailing, and (c) if mailed, five days after
mailing with postage prepaid. Any such notice shall be sent as follows:
To Shareholders following Closing:
Xxxxxx Xxxxx
0 Xxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
36
42
with a copy to:
A.J. Caffereta, III
00000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
To the Buyer, Parent, and after Closing to the Company:
Capstone Pharmacy Services, Inc.
0000 Xxxx Xxxxxx Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: R. Xxxx Xxxxxxx, Chief Executive Officer
with a copy to:
Xxxx Manner, Esq.
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
16.4 Confidentiality; Prohibition on Trading. Buyer and Shareholders or
their authorized representatives shall agree in advance to any press release or
other disclosure of the details of the transactions contemplated by this
Agreement, and, otherwise all parties to this Agreement agree to maintain the
confidentiality of such transactions unless disclosure is required by law.
Shareholders, Company and their affiliates agree not to trade in the securities
of Buyer or its affiliates based upon any nonpublic information.
16.5 Controlling Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Delaware, without giving
effect to provisions thereof regarding conflict of laws, and all questions
concerning its validity, construction and administration shall be determined in
accordance thereby.
16.6 Headings. Any table of contents and paragraph headings in this
Agreement are for convenience of reference only and shall not be considered or
referred to in resolving questions of interpretation.
16.7 Benefit. Subject to paragraph 15.1, this Agreement shall be binding
upon and shall inure to the exclusive benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. This Agreement
is not intended to, nor shall it, create any rights in any other party.
16.8 Partial Invalidity. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
37
43
Further, there shall be automatically substituted for such invalid or
unenforceable provision a provision as similar as possible which is valid and
enforceable.
16.9 Waiver. Neither the failure nor any delay on the part of any party
hereto in exercising any rights, power or remedy hereunder shall operate as a
waiver thereof, or of any other right, power or remedy; nor shall any single or
partial exercise of any right, power or remedy preclude any further or other
exercise thereof, or the exercise of any other right, power or remedy. No waiver
of any of the provisions of this Agreement shall be void unless it is in writing
and signed by the party against which it is sought to be enforced.
16.10 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
16.11 Interpretation; Knowledge. All pronouns and any variation thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or entity, or the context, may require. Further,
it is acknowledged by the parties that this Agreement has undergone several
drafts with the negotiated suggestions of both; and, therefore, no presumptions
shall arise favoring either party by virtue of the authorship of any of its
provisions or the changes made through revisions. Whenever in this Agreement the
term "to the best knowledge of Company or Shareholders" or the like is used,
Company and Shareholders shall each be deemed to have the knowledge of Company's
officers, directors, Shareholders and employees, and of its Affiliates; and
Company and Shareholders shall each be under a duty of due inquiry.
16.12 Entire Agreement. This Agreement, including the Exhibits and
Attachments hereto, constitutes the entire agreement between the parties hereto
with regard to the matters contained herein and it is understood and agreed that
all previous undertakings, negotiations, letter of intent and agreements between
the parties are merged herein. This Agreement may not be modified orally, but
only by an agreement in writing signed by Buyer, Company and Shareholders.
16.13 Further Assurance of Shareholders After Closing. Subsequent to the
Closing, Shareholders shall from time to time, at Buyer's request, execute and
deliver such other instruments of conveyance and transfer, and take such other
action as Buyer may request, in order to more effectively sell, transfer, assign
and deliver and vest in Buyer and Company, as the case may be, the benefits of,
title to and possession of the Stock and Assets.
16.14 NON-APPLICABILITY OF ARTICLE XIV. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, XXXXX XXXXXX ("XXXXXX") SHALL NOT BE SUBJECT TO ANY
OF THE RESTRICTIONS OF ARTICLE XIV (PRESERVATION OF BUSINESS AND NONCOMPETE
RESTRICTIONS) OF THIS AGREEMENT OR ANY OTHER RESTRICTION OR LIMITATION OF ANY
KIND WITH RESPECT TO COMPETITION WITH, OR SOLICITATION OF THE CUSTOMERS OF, THE
COMPANY, BUYER OR CAPSTONE, OR THE PRESERVATION OF CONFIDENTIAL OR PROPRIETARY
INFORMATION.
38
44
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"COMPANY":
XXXXX HEALTH SERVICES, INC.
By:_____________________________________
Title:__________________________________
"BUYER":
INSTITUTIONAL PHARMACY SERVICES, INC.
By:_____________________________________
Title:__________________________________
"PARENT":
CAPSTONE PHARMACY SERVICES, INC.
By:_____________________________________
Title:__________________________________
"SHAREHOLDERS":
[see subsequent signature pages with
acknowledgments]
45
______________________________________
Xxxxx Xxxxx
STATE OF CALIFORNIA )
COUNTY OF ________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
______________________________________
Notary Public
My Commission Expires:
_____________________________
46
______________________________________
Xxxxxxx Xxxxxxx
STATE OF CALIFORNIA )
COUNTY OF _________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
______________________________________
Notary Public
My Commission Expires:
_____________________________
47
______________________________________
X.X. Xxxxxxxx
STATE OF CALIFORNIA )
COUNTY OF __________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
48
______________________________________
Xxxxxx X. Xxxxxxxx
STATE OF CALIFORNIA )
COUNTY OF ____________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
______________________________________
Notary Public
My Commission Expires:
_____________________________
49
_______________________________________
Xxx Xxxx, Inc.
By:____________________________________
Title:_________________________________
STATE OF CALIFORNIA )
COUNTY OF __________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
50
_______________________________________
Xxxxxx Xxxxxx
STATE OF CALIFORNIA )
COUNTY OF _________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
51
_______________________________________
Health Accounting Services
By:____________________________________
Title:_________________________________
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
52
_______________________________________
Independent Quality Care
By:____________________________________
Title:_________________________________
STATE OF CALIFORNIA )
COUNTY OF _____________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
53
_______________________________________
Xxx Xxxxxxxxxx
STATE OF CALIFORNIA )
COUNTY OF _________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
54
_______________________________________
Xxxxx Xxxxxxxxxx
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
55
_______________________________________
Xxxx X. Xxxxx
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
56
_______________________________________
Xxxxxx X. Xxxxx
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
57
_______________________________________
Xxxxxx Xxxxxx
STATE OF CALIFORNIA )
COUNTY OF _____________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
58
_______________________________________
Xxxxxxx Xxxxxxxx
STATE OF CALIFORNIA )
COUNTY OF ____________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
59
_______________________________________
Xxxx X. Xxxx
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
60
_______________________________________
Xxxxx Xxxxxx
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
61
_______________________________________
Xxxxx X. Xxxxxxx
STATE OF CALIFORNIA )
COUNTY OF _____________________)
On and before me, _____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
62
_______________________________________
Xxxxxx Xxxxxxxxxx
STATE OF CALIFORNIA )
COUNTY OF ____________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
63
_______________________________________
Xxxxxx Xxxxx
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, ______________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
64
_______________________________________
Xxxx Xxxxx
STATE OF CALIFORNIA )
COUNTY OF __________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
65
_______________________________________
Xxxx X. Xxxxxxx
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
66
_______________________________________
Xxxxxx Xxxxxx
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
67
_______________________________________
Xxxxx Xxxxxxx
STATE OF CALIFORNIA )
COUNTY OF ____________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
68
_______________________________________
Xxxxxx Xxxxxxxxxxx
STATE OF CALIFORNIA )
COUNTY OF ___________________)
On and before me, _____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
69
_______________________________________
Xxxxxxx Xxxxxxxx
STATE OF CALIFORNIA )
COUNTY OF ____________________)
On and before me, ____________________, personally appeared ____________
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
70
_______________________________________
Xxxxxx Xxxxx
STATE OF CALIFORNIA )
COUNTY OF ____________________)
On and before me, ____________________, personally appeared ___________
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person whose name is subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument. Witness
my hand and official seal, this ____ day of _____________, 199_.
_______________________________________
Notary Public
My Commission Expires:
_____________________________
71
EXHIBIT INDEX
XXXXX HEALTH SERVICES, INC.
[Copies of Schedules and Exhibits to be Furnished Upon Request]
A Type of services and products provided by the Company at each location
1.2(1) Real Estate
1.2(2) Equipment and Furnishings, including vehicles
1.2(5) Bank Accounts
1.4 Continuing Liabilities
3.1 Allocation of Purchase Price
4.4 Financial Statements
4.5(4) Bonus Payments
4.7 Employment Discrimination
4.8(1) Licenses and Permits; Licensure Surveys; Deficiency Reports; List of Regulatory
Bodies
4.12 List and Copies/Summaries of Leases, Agreements and Contracts [ss.4.9(1), 4.9(3),
4.10, 4.16, 4.18]
4.14 Copies of all appraisals, mechanical and structural studies or reports or assessments,
engineering plans, architectural drawings, soil studies and surveys prepared within last
5 years.
4.15 Litigation
4.16 Employee Information
4.18 Insurance; Summary of Coverage; Pending Claims
4.24(1) Welfare Benefit Plans
4.24(2) Pension Benefit Plans
6.1(a) Dividend, Distribution and payment to Shareholders and third parties
6.1(b) Amounts paid to Independent Quality Care
8.5 Form of Non-Compete Agreement with:
(a) Xxx Xxxxx
8.6 Form of Employment Agreements with:
(a) Xxxxx Xxxxx
(b) Xxxx Xxxxx
10.3 Form of Opinion of Counsel for the Company and Shareholders
